Aurora Cannabis CEO Booth says outdoor growing won’t hurt the company

With news that Canada’s federal government is intent on allowing the outdoor cultivation of marijuana, many are wondering how Canada’s fledgling pot companies will be affected. Will greenhouse-based growers be priced out by the commoditization of cannabis? Not likely, says Terry Booth, CEO of Aurora Cannabis (TSX:ACB), who claims that both medical and recreational adult use weed demands a level of quality only achievable in a controlled indoor setting.

On the heels of the historic passing of Bill C-45 by Canada’s Parliament, news broke yesterday that the government will be introducing regulations allowing for outdoor grow. Not only is the move likely to further shrink the profit margins for cannabis growers but according to industry representatives who campaigned against outdoor cultivation, allowing it will result in more theft as well as increase the risk of cross-pollination and contamination, both issues that will impact crop quality.

But Booth says that he’s not worried, even as his company pushes forward with three mega-facilities for indoor growing.

“We’ve always supported indoor grow, outdoor grow, home grow —however you grow cannabis, do your very best to do it,” said Booth in conversation with BNN Bloomberg. “And really, that’s what drove us to build these wonderful facilities that have high yield with low risk and low cost and have high quality.”

“The outdoor grow, whether it be hoop house or in the fields is welcomed by Aurora and we’ll be on that, as well, for its derivatives. But you can’t really get the quality for the medical industry or for the adult usage [outdoors] but you can at facilities like Aurora Sky, for instance,” he says.

Booth’s deal-making continues to grab headlines, most recently with a BMO-financed debt facility worth as much as $250 million. The CEO says that BMO’s involvement is further proof of the legitimacy of Canada’s cannabis space.

“It’s important to know that each and every deal that we sign that we look at it in depth,” he says. “A lot of them are accretive out of the gate, and that’s just going to bode well for Aurora. This BMO financing is a perfect example of Aurora’s execution: big banks don’t lend big money unless you’ve done a great job in executing and building quality facilities or acquiring them.”

Not only banks but the big beer and liquor companies are now wanting a hand in the business, says Booth, who notes that in the state of Colorado, which legalized recreational pot four years ago, the liquor industry has suffered a 15 per cent drop in sales.

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“[Beer and liquor companies] are entering the space because they’re smart,” says Booth. “They’ve been around for 100, 125 years. It’s interesting to see them knocking on the doors of licensed producers —as is pharma, as is tobacco.”

Like the rest of Canada’s pot stocks, Aurora’s share price rose dramatically over the tail end of 2017 and into January, only to plummet in the following weeks. ACB experienced a good-sized bump on the news of Bill C-45’s passing but has since lost ground again.

Booth is adamant that while there will likely be some “carnage” over the months to come in the cannabis space, the truth is that there is no pot bubble —in fact, many of the pot co’s more than deserve their valuations.

“I love when people ask me about [the dot-com bubble],” he says. “The dot-com, at the time, none of us had computers — the cannabis space has existed, the market has existed for over 50 years. We’re just stepping into the space and pulling people over to our side of the fence.”

“If you look at the production numbers that Aurora is going to put up and others — the Sky facility, for example, at 100,000 kg a year at full production — at present pricing, that’s $800 million a year. We have three of those facilities going up now and our partnership with the Green Organic Dutchman makes it four,” he says.

About Jayson MacLean

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.